What can you learn from 72 Nobel Prize winners?

A study surveying 83 Nobel Prize winners about how they reached their breakthroughs found something interesting. You might expect that extensive calculations and reasoning brought these people to the pinnacle of their careers. For 72 of these researchers, they credited their intuition for their discoveries. Michael Brown (Nobel Prize winner in medicine in 1985) described his intuition as a guiding hand leading him step by step closer to the solution while he felt sure it was the right way. He had no clue why he felt so sure, but he found a way to describe the cholesterol metabolism.

A totally different story happened to Myron Scholes and Robert C. Merton (Nobel Prize winner in economics in 1997) in 1998. Both researchers started the hedge fund Long-Term Capital Management (LTCM). Financial traders relied on complex mathematical models to minimise uncertainty and maximise arbitrage opportunities. However, the collapse of a fund in 1998 demonstrated the limitations of this approach in the face of unforeseen events. Relying solely on historical data and assumptions about market behaviour proved inadequate when confronted with extreme market movements and unexpected correlations between financial instruments. This underscores the importance of properly understanding and managing uncertainty when developing financial strategies.

The crazy thing is that the hedge fund yielded way over-market rates for years. But one single event led to a bailout by the Federal Reserve Bank. Let’s transfer that learning to our industry, where no national bank will bail out your foundry. Historical data shows an upward trend for our industry from the 1970s to Dieselgate. From there on, we see a decline. Now the market is even more changing. Gigacastings, EVs and regulations make thousands of small die-casting machines obsolete. Nobody knows the market’s direction in the next few years.

Still, in these times, executives are forced to deliver clearly outlined projections for their board to justify adjusting course or opening new markets. When dealing with uncertainty, projections and statistical analysis are the enemies of progression. These numbers might give you a feeling of security, as numbers don’t lie, but they cannot predict the future in changing markets.

Here are five ways to make better decisions:

1. Don’t just rely on reasoning
   
   
2. Listen to your gut feeling
   
   
3. Find rules of thumb
   
   
4. Don’t seek perfection
   
   
5. Rely on the most important

At first glance, these five points are not too assuring and mean that you must change the reporting and forecasting that gave you good results for years. In rapidly changing conditions, you must constantly reevaluate your decisions and check if they align with the market situation you see.

For Amazon CEO Jeff Bezos, it is most important to generate two-door options. You can go through one and see where it leads you. If it goes the wrong way, you can return and open door no. 2. Keeping in motion is vital; reevaluate your situation.

So, let’s follow in the footsteps of him, Michael Brown and the other 71 Nobel Prize winners and accept uncertainty. Change your decision-making and make it reversible so you reach your pinnacle, too! I don’t want to see your company end up like LTCM!